Norway oil production may stop

A Norwegian oil strike is threatening to shut almost all oil and gas output, raising chances of government intervention.

24 Jun 2004 12:21 GMT

A total shut down would cost Norwary $130m in losses daily

Following a week-long dispute, employers in the world's number three oil exporter said they would lock out all workers from offshore platforms from Monday at 22:00 GMT.

The move is designed to encourage unions to back down after a strike already cutting 375,000 barrels per day (bpd) of Norway's 3.0 million bpd output.

"We see no other option for ending the dispute than to impose a lockout," said Per Terje Vold, director general of the employers' Norwegian Oil Industry Association on the seventh day of a strike over pensions and job security.

But unions refused to buckle and blasted the lockout threat as a high stakes gamble that the government would step in to end the strike. It said workers might shut output straight away.

"The threat of a lockout is an encouragement to our members to start a shutdown immediately," OFS union leader Terje Nustad said in a statement.

Prime Minister Kjell Magne Bondevik declined to say what Oslo would do about the escalating dispute.

Strike effect

A halt to oil and gas output would cut $130.3 million a day in export earnings and dent Norway's reputation as a supplier, especially of gas to nations from Britain to Italy which cannot switch suppliers at short notice.

"We see no other option for ending the dispute than to impose a lockout"

Per Terje Vold,director general of the employers' Norwegian Oil Industry Association

"The government sees that the situation is serious and will become more serious because of the lockout," he told reporters. "We are continuously evaluating the situation."

Brent oil prices were up 21 cents a barrel to $35.24 a barrel, partly on worries about the strike.

Shares in Norway's top oil firm Statoil were down just 1.1%, only slightly underperforming a 0.7% gain by the DJ Stoxx Energy index because of expectations of government intervention.

End in sight?

The lockout would start a day after oil workers plan to widen the strike on Norwegian Sea and North Sea platforms to halt about 800,000 bpd.

Even the unions predicted the strike would end.

"We will continue the strike as well as possible," Nustad said. "We have to continue and wait and see what the authorities will do, but I think they will intervene."

Olaisen said that Norway could afford to halt oil output but that it could not stop promised gas supplies to European nations.

Norway is the top west European gas supplier, exporting about 200 million cubic metres a day.